Who’s best to grant power of attorney to?

by Peter Newman, CFA for the Beacon

Appointing someone to act on your behalf under a power of attorney (POA) is one of the most important decisions you’ll make in your estate planning process. The POA grants significant authority over your finances, healthcare, or both, so choosing wisely ensures that your wishes will be respected and carried out effectively.  

Here’s a deeper look into key qualities to look for in the person to whom you grant POA: 

• Trustworthiness. The person named in your POA, commonly referred to as your “agent” or “attorney-in-fact,” will have legal authority to act on your behalf. It’s therefore vital that they are trustworthy, will prioritize your best interests, and will follow your instructions.
• Competence and expertise. Ideally, the person you choose should be organized, detail-oriented, and capable of managing financial or healthcare decisions. Someone with experience in these areas — such as a professional fiduciary or financially savvy relative — can be a good choice.
• Emotional stability. Your agent must remain calm and logical in high-pressure or emotional situations, such as handling end-of-life decisions or managing your assets during a medical crisis.
• Proximity. While not mandatory, choosing someone who lives nearby can be helpful, especially for healthcare decisions or if frequent in-person actions are required (e.g., signing documents, meeting with attorneys).
• Willingness and availability. The role of an agent can be time-consuming and stressful. Ensure the person you choose is willing to take on the responsibility and has the time to dedicate to managing your affairs.

Can you choose your adult child? 

Choosing an agent is a critical decision, and while many people consider naming their children, this option may not always be ideal. Here are five good reasons not to name your children in your power of attorney: 

1. Potential for family conflict: If you have multiple children, appointing one child as your agent can lead to disagreements or jealousy among siblings. This may strain family relationships, especially if decisions made by the chosen child are perceived as unfair or self-serving.
2. Lack of financial or legal expertise: Managing someone else’s financial or healthcare decisions can be complex. Your child may lack the necessary knowledge to handle these responsibilities effectively. Errors in judgment, even if unintentional, could have serious consequences for your finances or well-being.
3. Emotional involvement: Children, no matter how well-meaning, may struggle to make objective decisions during emotionally charged situations. For example, in end-of-life healthcare decisions, they might allow their emotions to override your stated wishes or act out of guilt rather than logic.
4. Conflicting priorities: Your child may already have significant personal or professional obligations, such as managing their own family or career. Adding the responsibilities of a POA could overwhelm them, leading to delays or mistakes in managing your affairs.
5. Risk of misuse or abuse of authority: Although rare, there is always a risk that a child with POA might misuse the authority, whether intentionally or unintentionally. This could include mismanaging funds, making decisions that benefit them financially, or ignoring your stated wishes. Choosing an impartial third party can mitigate this risk.

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